Cambridge Place Investment Partners, a US-based fund, has filed lawsuit against 15 banks for allegedly mis-selling a total of $2.4bn in mortgage-backed securities without conducting proper due diligence.
Names of the banks mentioned in the lawsuit as defendants include JP Morgan, Citigroup, Credit Suisse, Deutsche Bank, Merrill Lynch, UBS, Goldman Sachs, Morgan Stanley, HSBC, Barclays and RBS.
The lawsuit filed in Boston alleged that banks were ‘complicit in creating an environment of improper lending practices’ by having representatives on site at the mortgage lenders and gave them billions of dollars in credit.
The Wall Street bank defendants fostered the environment for, permitted, and profited from the mortgage originators’ rampant violations of sound lending practices. Driven to profit from the lucrative secularization business, the defendants demanded enormous volumes of loans, leading to erosion in lending standards, the suit said.
The complaint accused Barclays of mis-selling $141m of securities between 2005 and 2007, and HSBC of mis-selling $64m of securities between 2005 and 2006.
The case is being handled by a New York-based law firm Bernstein Litowitz Berger & Grossman.